I was in Penang last month at the invitation of Penang Institute (formerly Socio-Economic Research Institute or SERI) to chair a roundtable discussion on decentralisation.

It is admirable that they are taking this important issue seriously and I hope they will pursue it with vigour.

On paper, Malaysia is still a federation of states. But we have seen so much centralisation over the last few decades such that the nation is increasingly looking like a unitary state run by and from Putrajaya.

In fact, if we were to look closer at the situation, the centralisation in Malaysia is not towards overall government administration in Putrajaya; so much power is actually centralised under the Prime Minister’s Department.

A quick survey would tell us that in addition to the prime minister and the deputy prime minister, there are six ministers and four deputy ministers in the Prime Minister’s Department. And the responsibilities of this department are huge, ranging from religious issues such as waqf, zakat and hajj to national unity, and even judicial matters and legal training.

Bodies that would function best if they are independent are also, curiously, listed as units under the purview of the Prime Minister’s Department. These include the Attorney General’s Chambers, the Election Commission, Judicial Appointment Commission, Department of Statistics and Malaysian Anti-Corruption Commission. Even Parliament is included in the department’s list.

More curious still is the case of Islamic religious administration.  It is widely understood that the administration of Islamic affairs is a state responsibility. If that is the case, why then does the Prime Minister’s Department have at least eight bodies dealing with Islamic affairs?

So huge is the prime minister’s reach such that when I last checked, there were at least 62 agencies and bodies directly under the Prime Minister’s Department.

These do not yet include entities that are indirectly placed under the prime minister, such as many of the government-linked investment companies (GLICs), government-linked companies (GLCs), newer entities like TalentCorp, and other entities in which the prime minister has the power to put his appointees on the board.

What I am trying to discuss here is just a small indication of how far we have strayed from the spirit of decentralisation. The culture of centralisation has become so pervasive that today, we don’t even blink when more and more powers are concentrated in the centre.  
Almost no one complained when the Constitution was amended to allow the federal government to take over water services in the states.

And I have not yet heard people arguing that the existence of bodies like the National Fatwa Council and the Department of Islamic Development Malaysia (Jakim) is an usurpation of state powers to administer religious affairs.

But having said that, we must be cautious too when talking to those calling for decentralisation. There are many people out there who simply want to see a transfer of powers from a centralised federal structure to another centralised structure, such as the state government.

True decentralisation should follow the principle of subsidiarity — decisions must be taken as close as possible to the stakeholders. Nothing should be done by a larger and more complex organisation if it can be done as well by a smaller and simpler organisation. Any activity that can be performed by a more decentralised entity should be decentralised.  This is the key guiding principle behind the call for a smaller and more limited government.

We know that a transfer of monopoly from government to a crony company is not true privatisation. Similarly, mere transfer of power from the federal government to a state or local government is not decentralisation either.  Instead, it is just what it is — a transfer of power from one centralised structure to another.

If we really want to pursue decentralisation, then we must actively search for ways by which power can be transferred to the lowest common denominator.  Take schools as an example.  At the moment, Putrajaya dictates everything that happens in a school.

To decentralise education, it is not enough to say that schools should be managed by the state or local government. Instead, we should create a system so that each school has its own autonomous governing body that has powers to make real decisions. Only then can decisions be made closest to the parents and students, who are the most important stakeholders.

It should be easy enough to spot politicians who truly believe in decentralisation. They should be demanding that important decisions – such as the selection of election candidates – be made by their own party branches instead of being dictated by national supremos. But how many politicians are brave enough to stand up and demand this right?

Malaysia needs to see more power being decentralised away from the prime minister to the ministries, and from Putrajaya to the lower levels of administration.  The philosophy motivating any future decentralisation exercise has to be the empowerment of citizens, allowing us, the common people, to decide what is best for us.

Without a clear commitment to empower the rakyat, we risk seeing the state capitals merely taking over the monopoly of power from Putrajaya, and that would benefit absolutely no one.

Wan Saiful Wan Jan is chief executive of the Institute for Democracy and Economic Affairs. The views expressed in this article are his own.

This article appeared in The Forum column of The Edge weekly edition March 5-March 11, 2012